The minority coalition, led by the centre-right Gerb party, stepped down minutes before a no-confidence vote over economic mismanagement and widespread corruption.
Prime Minister Rosen Zhelyazkov stated the government's resignation reflected the will of the people, following demonstrations that drew over 100,000 protesters.
A key source of public frustration is the influence of politician and oligarch Delyan Peevski, sanctioned by the US and UK, whose party supports the government.
President Rumen Radev will now ask parliamentary parties to form a new government; if unsuccessful, an interim administration will be appointed until new elections.